Being a tax nonresident of Finland

Who is regarded as a tax nonresident?

Foreign citizens living in foreign countries are nonresidents. If a foreign citizen arrives in Finland to stay for a shorter period than six months, he or she will still be a nonresident.

In addition, Finnish citizens who have moved to a foreign country will be regarded as nonresidents if three years have elapsed since the calendar year when the move took place. Before three years they can be regarded as nonresidents if they have shown explicit evidence that they no longer have any close ties connecting them with Finland. Such close ties are constituted by family still staying in Finland, the house or apartment still in the taxpayer's possession in Finland, and gainful employment or business that still continues to be undertaken in Finland, continuing coverage by the Finnish social security system etc.

What does tax nonresident mean?

If you are a tax nonresident, it means that your liability to pay Finnish tax will only concern your income that is derived from Finland.

The tax rate at which a nonresident's wages will be taxed will not depend on the amount of income. Instead, it is always 35% (and 15% for sportsmen and performing artists).

You can request that your earned income (except dividends) be taxed under the progressive scale instead of the tax at source. The progressive tax rate depends on the amounts of annual income and deductible expenses. Acceptable deductions include commuting expenses and work related expenses. Also your taxable earned income in your country of tax residence and related deductions will be taken into consideration. Finland only taxes your income from Finnish sources, but your taxable income from your country of tax residence has an increasing effect on your tax rate in Finland.

If you are a nonresident you do not have to pay Finnish tax on interest income, Finnish tax on capital gains derived from selling shares of listed companies, Finnish tax on wages received from a foreign employer. If a nonresident works in a foreign country, Finnish tax on the wages will not be levied unless the wages are being earned onboard a Finnish ship or in the service of a Finnish public corporate body.

International tax treaties can sometimes restrict the taxing rights of Finland. E.g. the Nordic tax convention includes a rule saying that only 15% of income tax on dividend (instead of the normal 30%) will be levied on receipts of dividend from Finland received by a resident of another Nordic country.